Bowman v. MonsantoOne Soybean Farmer’s Supreme Court Challenge and the

Future of Self-Replicating Technologies

2

3

Monsanto’s Roundup Ready Technology▪ Monsanto invented genetically modified Roundup Ready soybeans

that exhibit resistance to glyphosate-based herbicides, such as Monsanto's Roundup weedkiller.

▪ Monsanto has patents that cover the Roundup Ready genes as well as plant cells and seeds that carry the Roundup Ready gene.

4

Monsanto Sells Roundup Ready Soybeans to Farmers Directly and Licenses Its Technology to Seed Producers

Licensed Seed Producer

5

Monsanto’s Technology Agreement Restricts the Use of Roundup Ready Seeds to a Single Commercial Crop Season

The licensed grower agrees:

▪ “to use the seed containing Monsanto gene technologies for planting a commercial crop only in a single season”;

▪ “to not supply any of this seed to any other person or entity for planting”;

▪ “to not save any crop produced from this seed for replanting, or supply saved seed to anyone for replanting”; and

▪ “to not use this seed or provide it to anyone for crop breeding, research, generation of herbicide registration data, or seed production.”

But, farmers may sell soybeans they grow in the commodity market.

6

Vernon Bowman’s Two Soybean Crops▪ The First Planting

▪ From 1999 – 2007, Bowman bought Roundup Ready soybean seeds from a licensed seed producer and signed a Technology Agreement.

▪ Bowman planted those seeds in the primary growing season and sold the harvested, second-generation seeds to a grain elevator.

▪ The Second Planting

▪ Bowman purchased commodity seeds from a grain elevator.

▪ Bowman planted the seeds and sprayed Roundup weedkiller on his fields. He saved some seeds for future plantings.

7

Monsanto Sues Bowman for Patent Infringement▪ In November 2007, Monsanto investigated eight of Bowman’s fields

and confirmed that his second-crop soybeans contained the Roundup Ready gene.

▪ Monsanto filed suit in the Southern District of Indiana and moved for summary judgment less than a year later.

▪ District Court Judge Richard Young requested supplemental briefing on the Supreme Court’s recent decision in Quanta Computer, Inc. v. L.G. Electronics, 553 U.S. 617 (2008).

8

Quanta Computer, Inc. v. L.G. Electronics

9

Because Intel’s License from LG Authorized the Sale to Quanta, LG’s Patent Rights Were Exhausted

10

Quanta Computer, Inc. v. L.G. Electronics, 553 U.S. 617 (2008)

“The authorized sale of an article that substantially embodies a patent exhausts the patent

holder’s rights.”

11

▪ Bowman argued that Monsanto’s patents in the commodity seeds were exhausted at the time they were sold by other farmers to the grain elevator, because those sales were authorized under Monsanto’s license agreement.

▪ The district court nevertheless found itself bound by two pre-Quanta Federal Circuit cases that relied on the conditional-sale approach criticized by the Supreme Court in Quanta v. LG.

▪ The district court entered judgment for Monsanto in the amount of $84,000.

The District Court Rejected Bowman’s Defense Under Quanta v. LG

12

In September 2011, the Federal Circuit Affirmed ▪ The Federal Circuit had previously decided two cases involving farmers

who had saved Roundup Ready soybean seeds from the harvest during one growing season and replanted those seeds in the next season, in violation of the Monsanto Technology Agreement.

▪ In Monsanto Co. v. McFarling, 302 F.3d 1291 (Fed. Cir. 2002), the Federal Circuit held that the conditions in Monsanto's Technology Agreement were valid and legal and thus the sale of Roundup Ready soybean seeds to McFarling was not an authorized sale that exhausted patent rights.

▪ In Monsanto Co. v. Scruggs, 459 F.3d 1328 (Fed. Cir. 2006), the farmer bought the patented seeds from a licensed producer but failed to execute the Technology Agreement. The Federal Circuit held that there was no authorized sale because the use of the seeds was conditioned upon obtaining a license from Monsanto.

13

Monsanto v. Bowman, 657 F.3d 1341 (Fed. Cir. 2011)

“Thus, the doctrine of patent exhaustion did not bar the

infringement claims in McFarling or Scruggs. Similarly, here, patent

exhaustion does not bar an infringement action.”

14

The Federal Circuit Held that Growing New Seeds “Makes” a Newly Infringing Article▪ Under 35 U.S.C. § 271(a), “whoever without authority makes, uses,

offers to sell, or sells any patented invention . . . infringes the patent.”

▪ “Even if Monsanto's patent rights in the commodity seeds are exhausted, such a conclusion would be of no consequence because once a grower, like Bowman, plants the commodity seeds containing Monsanto’s Roundup Ready technology and the next generation of seed develops, the grower has created a newly infringing article.”

▪ “Applying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder.”

15

Bowman’s Petition for a Writ of Certiorari▪ The Federal Circuit’s decision ignores the Supreme Court’s decision in

Quanta and, instead, makes it possible for patent holders to control the use of their patented products even after an authorized sale has occurred.

▪ The planting of commodity seeds represents the “use” of purchased seeds, similar to Quanta’s use of the Intel chipsets embodying LG’s patents, and does not represent the “making” of a newly infringing article.

16

The Solicitor General Recommended Against Review

“In deciding this case, the court did not determine whether [Monsanto’s] rights in the

commodity seeds had been exhausted because it found that point to be of no consequence. Even if

exhaustion had occurred, the court explained, [Bowman] would still be liable because he had

created a newly infringing article when he planted the commodity seeds containing

respondent's Roundup Ready technology and the next generation of seed developed.”

17

▪ The only question presented by Bowman’s petition is whether farmers like Bowman who have acquired Monsanto’s Roundup Ready seed through an authorized sale may lawfully create new generations by exploiting the seeds' self-replicating properties.

▪ The Court should deny certiorari to allow the case law surrounding self-replicating technologies to develop further.

Brief for the United States

18

Bowman’s Supplemental Brief Argued that the Federal Circuit Relied on Its Pre-Quanta Cases▪ The damages awarded in the district court were for the use of the

commodity seeds, not for the making of newly infringing seeds.

▪ “Had the Federal Circuit concluded (as it should have) that Monsanto's patent rights to seeds sold by the grain elevator were exhausted, it would have been required to vacate the judgment and remand for review of the damages award based on the number of infringing units Bowman allegedly ‘made’ by planting.”

19

Bowman’s Supplemental Brief

“As any Indiana farmer will confirm (especially one living through the current

drought), acres of commodity soybeans planted as a

risky second crop late in the growing season

may not produce any progeny.”

20

Possible Outcomes at the Supreme Court▪ Affirm Federal Circuit’s holding that planting commodity seeds creates

newly infringing articles.

▪ Create a bright-line rule that would cut off all patent rights following an authorized sale like the one here.

▪ Monsanto could use contract-law remedies to avoid losing sales.

▪ A “terminator” gene could prevent the propagation of successive generations of seeds.

▪ Other?

21

Thank You